Athens News Agency: News in English, 05-10-06

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From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

[01] EU acknowledges Greek drive to correct fiscal finances

[02] ECB governing council leaves key interest rates unchanged

[01] EU acknowledges Greek drive to correct fiscal finances

"Since April the (EU) Commission has congratulated the government on measures taken to correct fiscal finances," Joaqu?n Almunia, the European Union's commissioner for economic and monetary affairs, told a news conference.

"At the end of October, the Greek government will submit a report to the Commission. We will analyse and evaluate the report, and in the middle of November release our forecasts for 2006. The Commission will then make a recommendation to be discussed by ECOFIN (EU finance ministers) early in 2006," Almunia told a joint news conference with Finance Minister George Alogoskoufis.

At the same time, the commissioner noted that some of the government's measures were inadequate. Corrective steps were also needed in 2006.

"In 2006, fiscal adaptation will need to be of a structural nature," he said.

Replying to a reporter's question, Almunia pledged that neither he nor the Commission would propose measures that could dampen growth.

"Without growth, there would be no job creation, and the European social model could not be maintained. Structural reform is a precondition for growth and a rise in employment," he noted.

Alogoskoufis welcomed close cooperation with the commissioner.

"Despite a very difficult set of circumstances, we have lowered the fiscal deficit to 3.6% this year from 6.6% in 2004 without jeopardising growth of 3.6%," the minister said.

"Through the fiscal audit, the real state of public deficits emerged. We conducted the audit to know where we were treading. Credibility has been restored and the government is dedicated to fiscal revitalisation," Alogoskoufis added.

[02] ECB governing council leaves key interest rates unchanged

Flanked by ECB Vice-President Loukas Papademos and the latter's successor to the governorship of the Bank of Greece, Nikos Garganas, Trichet nevertheless reiterated his call for "strong vigilance" due to "ample liquidity in the euro-zone", as he explained.

In further outlining the central bank's rationale for "staying the course" on interest rates, the former chairman of the European Monetary Committee said higher oil prices have "dampened" real GDP in the Union, which he announced as growing on a quarter-to-quarter rate of 0.4 percent and 0.3 percent, respectively, over the first two quarters of this year.

Moreover, he cautiously outlined the ECB's prediction that economic growth may gradually pick up the second half of the year, pointing to what he said were positive prospects for euro-zone exports due to a continued rise in global demand on the external side, in tandem with continued favorable financing conditions within the Union, on the domestic side. Other elements of Trichet's guardedly optimistic outlook were the "robust growth" of corporate earnings and the gradual recovery of consumption in the euro-zone.

Expectedly, the primary "risk" vis-?-vis this prediction, according to Trichet, was the price of oil, combined with concerns about global imbalances and weak consumer confidence. Conversely, he more-or-less dismissed any medium- or long-term economic effects of the recent hurricanes in the United States.

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